Roots of Modern Capitalism

Target: I can explain the roots of modern capitalism including cottage industry, market economy and mercantilism..

Capitalism Privately Owned- owned by either one individual or by a small group of individuals Opposite of Communism- government controls the production of goods & services

Cottage Industry Definition: business or manufacturing activity carried on in a person’s home. Example: Merchant buys wool from a sheep farm. Drops wool off at the HOME of a textile maker. Textile maker makes cloth in their own home. Town merchant sells cloth to make a profit

Market Economy A capitalistic type of economic system in which there is free competition and prices are determined by the interaction of supply and demand. There is little government intervention. Opposite of Command Economy- Government has total control

What if there was no competition?

Mercantilism The key idea of mercantilism is that a country’s power depends on it wealth.(gold and silver) A country must export (sell) to other countries, more goods than it imports (buys) from other countries

Mercantilism According to Mercantilism, countries should establish colonies. A colony is a settlement of people living in a territory controlled by their home country Colonists provide raw materials that are not found or made in the home country. These materials are then shipped to the home country to be used for manufacturing. This keeps the home country from having to buy goods from other countries.

According to the political cartoon, what is one characteristic of mercantilism from the perspective of the mother country?

Is it cottage industry, market economy, or mercantilism?

Is it cottage industry, market economy, or mercantilism?

Adam Smith (1723 - 1790) Wrote the Wealth of Nations which explained the concepts of economic freedom, the role of self-interest in the economy, and division of labor. Division of Labor - more efficient; specialized labor Free market economy - the most productive economy is one that is allowed to regulate itself without government intervention.

Target: I can explain the roots of modern capitalism including cottage industry, market economy and mercantilism. Exit slip: Define cottage industry, market economy, and mercantilism.

Economy How it Works Pros and Cons Cottage Industry Market Mercantilism